China faces mounting economic challenges. Yet even as growth slows and supply chains are disrupted by geopolitics and the struggle to contain COVID-19, improving the health of the country’s vast population remains a high priority.
The scale of Beijing’s healthcare ambitions was evident at the annual gatherings of the two organizations behind key national-level decisions: the National People’s Congress (the national legislative body) and the Chinese People’s Political Consultative Conference (the top political advisory body).
By emphasizing equity and quality in healthcare – together with a big innovation drive in the life sciences sector – the so-called “Two Sessions” provided valuable insights into the government’s priorities for the coming year and its overall direction of policy.
Key elements of healthcare strategy discussed at the meetings included deepening health insurance reform and accelerating progress towards a tiered healthcare delivery system, while simultaneously maintaining strict control on costs.
For multinational companies, the deepening of the healthcare reform will create both opportunities and challenges.
In terms of therapy areas, cardiovascular disease, cancers and infectious diseases look set to remain important fields of growth. At the same time, the decision to strengthen the capabilities of public hospitals in maternal health, paediatrics, mental health and geriatric health services will present new opportunities.
Significantly, rare diseases are also moving up the government’s agenda, creating openings for multiple novel therapies.
And the government’s focus on a tiered healthcare system underscores the need for quality medicines and healthcare services in provincial medical centres, pointing to potentially wider access for innovative medicines outside the main population centres.
However, the Chinese state is not going to let up on pricing. Indeed, companies can expect more cost pressures in future as the authorities employ a variety of purchasing and reimbursement measures to control medical expenses, including the Volume-Based Procurement, Diagnosis Related Groups and Diagnosis-Intervention Packet schemes.
When it comes to innovation, multinational players have a chance to play a significant role in building up the life sciences ecosystem. But more innovation also means greater competition in future. China is clearly now a rising power in biotechnology, with the country having gone from copying Western generic medicines to developing its own innovative drugs in just a few short years.
The government aims to build on the progress made to date, with increased funding for basic research, enhanced intellectual property rights and improved tax incentives for smaller companies.
The goal is to encourage the development of “best-in-class” and “first-in-class” drugs – and the strategy is already yielding dividends. Products from China-headquartered companies now represent 12% of the global R&D pipeline, up from 4% five years ago and 2% in 2006, according to IQVIA data.
Delegates to the National People’s Congress (NPC) and members of the Chinese People’s Political Consultative Conference (CPPCC) are representatives from industry, academia, business, politics, and other areas. Their proposals to the Two Sessions therefore shed important light on trends in thinking across the Chinese state.
The following are some of the specific ideas put forward by NPC delegates and CPPCC members relating to healthcare, many of which we can expect to work their way through the system in the coming years:
- re-evaluation of drug prices for medical insurance based on cost of innovation
- preferential pricing in National Reimbursement Drug List (NRDL) negotiations for local innovative drug developers
- simplified process for including new indications in NRDL
- more support for local medical device companies
- multi-tiered health insurance system to expand access to drugs for rare diseases
- more support for R&D of orphan drugs
- increased funding for basic research on innovative drugs